NOTE 6 – LOANS RECEIVABLE

Loans receivable at June 30, 2012 and December 31, 2011 consist of the following:


(Dollars in thousands)
	June 30, 2012		December 31, 2011
Residential mortgage loans:
Residential 1-4 family	$	409,307	$	483,244
Construction/ Owner Occupied		9,482		16,143

Total residential mortgage loans		418,789		499,387

Commercial loans:
Real estate		3,313,863		3,318,982
Business		2,306,160		2,045,374

Total commercial loans		5,620,023		5,364,356

Consumer and other loans:
Indirect automobile		309,855		261,896
Home equity		1,159,899		1,061,437
Other		227,946		200,961

Total consumer and other loans		1,697,700		1,524,294

Total loans receivable	$	7,736,512	$	7,388,037

In 2009, the Company acquired substantially all of the assets and liabilities of CapitalSouth Bank (“CSB”), and certain assets and assumed certain deposit and other liabilities of Orion Bank (“Orion”) and Century Bank (“Century”). In 2010, the Company acquired certain assets and assumed certain deposit and other liabilities of Sterling Bank. The loans and foreclosed real estate that were acquired in these transactions are covered by loss share agreements between the FDIC and IBERIABANK, which afford IBERIABANK significant loss protection. Under the loss share agreements, the FDIC will cover 80% of covered loan and foreclosed real estate losses up to certain thresholds for all four acquisitions and 95% of losses that exceed those thresholds for CSB, Orion, and Century only.

Because of the loss protection provided by the FDIC, the risks of the CSB, Orion, Century, and Sterling loans and foreclosed real estate are significantly different from those assets not covered under the loss share agreement. Accordingly, the Company presents loans subject to the loss share agreements as “covered loans” in the information below and loans that are not subject to the loss share agreement as “non-covered loans.”

Non-covered Loans

The following is a summary of the major categories of non-covered loans outstanding as of June 30, 2012 and December 31, 2011:


(Dollars in thousands)
Non-covered Loans:	June 30, 2012		December 31, 2011
Residential mortgage loans:
Residential 1-4 family	$	225,739	$	266,970
Construction/ Owner Occupied		9,482		16,143

Total residential mortgage loans		235,221		283,113

Commercial loans:
Real estate		2,660,509		2,591,013
Business		2,180,479		1,896,496

Total commercial loans		4,840,988		4,487,509

Consumer and other loans:
Indirect automobile		309,855		261,896
Home equity		942,063		826,463
Other		218,238		194,607

Total consumer and other loans		1,470,156		1,282,966

Total non-covered loans receivable	$	6,546,365	$	6,053,588

The following tables provide an analysis of the aging of non-covered loans as of June 30, 2012 and December 31, 2011. Because of the difference in the accounting for acquired loans, the tables below further segregate the Company’s non-covered loans receivable between loans acquired from OMNI and Cameron in 2011 and loans originated by the Company.


	Non-covered loans excluding acquired loans
(Dollars in thousands)
	Past Due ⁽¹⁾
June 30, 2012	30-59 days		60-89 days		Greater than 90 days		Total past due		Current		Total non-covered loans, net of unearned income		Recorded investment > 90 days and accruing

Residential
Prime	$	1,111	$	1,465	$	6,417	$	8,993	$	225,291	$	234,284	$	491
Subprime		—		—		—		—		—		—		—
Commercial
Real Estate-Construction		21		—		2,114		2,135		305,249		307,384		—
Real Estate-Other		3,164		579		28,504		32,247		1,945,098		1,977,345		82
Commercial Business		404		20		2,824		3,248		2,106,924		2,110,172		—
Consumer and Other
Indirect Automobile		731		188		867		1,786		300,565		302,351		—
Home Equity		2,545		529		6,462		9,535		871,770		881,305		—
Credit Card		120		47		372		539		45,154		45,693		—
Other		311		99		556		966		161,261		162,227		—

Total	$	8,407	$	2,927	$	48,116	$	59,449	$	5,961,312	$	6,020,761	$	573


	Non-covered loans excluding acquired loans
(Dollars in thousands)
	Past Due ⁽¹⁾
December 31, 2011	30-59 days		60-89 days		Greater than 90 days		Total past due		Current		Total loans, net of unearned income		Recorded investment > 90 days and accruing

Residential
Prime	$	731	$	325	$	6,009	$	7,065	$	271,534	$	278,599	$	1,099
Subprime		—		—		—		—		—		—		—
Commercial
Real Estate-Construction		266		—		2,582		2,848		273,824		276,672		—
Real Estate-Other		880		54		34,087		35,021		1,778,235		1,813,256		636
Commercial Business		302		277		6,642		7,221		1,793,959		1,801,180		20
Consumer and Other
Indirect Automobile		1,232		159		994		2,385		248,070		250,455		—
Home Equity		3,102		717		4,955		8,774		741,968		750,742		82
Credit Card		467		107		403		977		46,786		47,763		—
Other		349		147		623		1,119		129,640		130,759		4

Total	$	7,329	$	1,786	$	56,295	$	65,410	$	5,284,016	$	5,349,426	$	1,841

⁽¹⁾	Past due loans include loans on nonaccrual status as of the period indicated. Nonaccrual loans are presented separately in the “Nonaccrual Loans” section below.


(Dollars in thousands)	Non-covered acquired loans
	Past Due ⁽¹⁾
June 30, 2012	30-59 days		60-89 days		Greater than 90 days		Total past due		Current		Discount			Total non-covered loans, net of unearned income		Recorded investment > 90 days and accruing

Residential
Prime	$	39	$	60	$	280	$	379	$	593	$	(35	)	$	937	$	280
Subprime		—		—		—		—		—		—			—		—
Commercial
Real Estate-Construction		445		33		2,556		3,034		35,080		(3,922	)		34,192		—
Real Estate-Other		3,997		949		33,416		38,362		341,634		(38,408	)		341,588		421
Commercial Business		212		219		4,036		4,467		76,945		(11,105	)		70,307		—
Consumer and Other
Indirect Automobile		126		10		143		279		7,208		17			7,504		—
Home Equity		1,228		—		3,613		4,841		57,935		(2,018	)		60,758		—
Credit Card		—		—		—		—		—		—			—		—
Other		373		36		339		748		16,368		(6,798	)		10,318		—

Total	$	6,420	$	1,307	$	44,383	$	52,110	$	535,763	$	(62,269	)	$	525,604	$	701


(Dollars in thousands)	Non-covered acquired loans
	Past Due ⁽¹⁾
December 31, 2011	30-59 days		60-89 days		Greater than 90 days		Total past due		Current		Discount			Total non-covered loans, net of unearned income		Recorded investment > 90 days and accruing

Residential
Prime	$	124	$	60	$	185	$	369	$	4,145	$	—		$	4,514	$	185
Subprime		—		—		—		—		—		—			—		—
Commercial
Real Estate-Construction		629		—		3,755		4,384		61,705		(6,458	)		59,631		345
Real Estate-Other		7,213		4,036		29,725		40,974		448,288		(47,808	)		441,454		794
Commercial Business		183		69		639		891		105,796		(11,371	)		95,316		3
Consumer and Other
Indirect Automobile		171		10		258		439		10,813		189			11,441		—
Home Equity		2,509		125		4,104		6,738		73,822		(4,839	)		75,721		438
Credit Card		—		—		—		—		—		—			—		—
Other		413		545		571		1,529		16,067		(1,511	)		16,085		150

Total	$	11,242	$	4,845	$	39,237	$	55,324	$	720,636	$	(71,798	)	$	704,162	$	1,915

⁽¹⁾	Past due information includes loans acquired from OMNI and Cameron at the gross contractual balance outstanding at June 30, 2012 and December 31, 2011.

Nonaccrual Loans

Interest income on loans is accrued over the term of the loans based on the principal balance outstanding. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield, using the effective interest method.

The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Mortgage, credit card and other personal loans are typically charged down to net collateral value, less cost to sell, no later than 180 days past due. Past due status is based on the contractual terms of loans. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and management’s assessment of the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The impairment loss is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.

In general, all interest accrued but not collected for loans that are placed on nonaccrual status or charged off is reversed against interest income. Interest received on nonaccrual loans is accounted for on the cash-basis method or cost-recovery method, until qualifying for a return to accrual status. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following table provides an analysis of non-covered loans on nonaccrual status at June 30, 2012 and December 31, 2011. Nonaccrual loans in the table exclude loans acquired.


(Dollars in thousands)
	June 30, 2012		December 31, 2011

Residential
Prime	$	5,926	$	4,910
Subprime		—		—
Commercial
Real Estate-Construction		2,114		2,582
Real Estate-Other		28,422		33,451
Business		2,824		6,622
Consumer and Other
Indirect Automobile		867		994
Home Equity		6,462		4,873
Credit Card		372		403
Other		556		619

Total	$	47,543	$	54,454

Covered Loans

The carrying amount of the acquired covered loans at June 30, 2012 and December 31, 2011 consisted of loans determined to be impaired at the time of acquisition, which are accounted for in accordance with ASC Topic 310-30, and loans that were considered to be performing at the acquisition date, accounted for by analogy to ASC Topic 310-30, as detailed in the following tables.


(Dollars in thousands)	June 30, 2012
Covered loans	Acquired Impaired Loans		Acquired Performing Loans		Total Covered Loans
Residential mortgage loans:

Residential 1-4 family	$	30,089	$	153,479	$	183,568

Total residential mortgage loans		30,089		153,479		183,568

Commercial loans:
Real estate		4,789		648,565		653,354
Business		2,483		123,198		125,681

Total commercial loans		7,272		771,763		779,035

Consumer and other loans:
Home equity		24,835		193,001		217,836
Other		—		9,708		9,708

Total consumer and other loans		24,835		202,709		227,544

Total covered loans receivable	$	62,196	$	1,127,951	$	1,190,147


(Dollars in thousands)	December 31, 2011
Covered loans	Acquired Impaired Loans		Acquired Performing Loans		Total Covered Loans
Residential mortgage loans:

Residential 1-4 family	$	31,809	$	184,465	$	216,274

Total residential mortgage loans		31,809		184,465		216,274

Commercial loans:
Real estate		23,127		704,841		727,968
Business		4,053		144,825		148,878

Total commercial loans		27,180		849,666		876,846

Consumer and other loans:
Home equity		30,267		204,707		234,974
Other		116		6,239		6,355

Total consumer and other loans		30,383		210,946		241,329

Total covered loans receivable	$	89,372	$	1,245,077	$	1,334,449

FDIC loss share receivable

The following is a summary of the year to date activity in the FDIC loss share receivable for the periods indicated.


(Dollars in thousands)	Six Months Ended June 30,
	2012			2011
Balance, beginning of period	$	591,844		$	726,871
Increase due to loan loss provision recorded on FDIC covered loans		10,633			26,706

(Amortization) Accretion		(56,411	)		(40,228	)
Submission of reimbursable losses to the FDIC		(72,527	)		(48,416	)
Other		(3,616	)		5,532

Balance, end of period	$	469,923		$	670,465

ASC 310-30 loans

The Company acquired loans through previous acquisitions which are subject to ASC Topic 310-30. The Company’s allowance for loan losses for all acquired loans subject to ASC Topic 310-30 would reflect only those credit impairment losses incurred after acquisition.

The following is a summary of changes in the accretable yields of acquired loans during the six months ended June 30, 2012 and 2011.


(Dollars in thousands)
June 30, 2012	Acquired Impaired Loans			Acquired Performing Loans			Total Acquired Loan Portfolio

Balance, beginning of period	$	83,834		$	386,977		$	470,811
Net transfers from (to) nonaccretable difference to (from) accretable yield		5,277			(4,158	)		1,119
Accretion		(12,878	)		(109,850	)		(122,728	)

Balance, end of period	$	76,233		$	272,969		$	349,202


(Dollars in thousands)
June 30, 2011	Acquired Impaired Loans			Acquired Performing Loans			Total Acquired Loan Portfolio

Balance, beginning of period	$	82,381		$	626,190		$	708,571

Acquisition		7,346			139,163			146,509
Net transfers from (to) nonaccretable difference to (from) accretable yield		23,271			(259,306	)		(236,035	)
Accretion		(20,232	)		(74,109	)		(94,341	)

Balance, end of period	$	92,766		$	431,938		$	524,704

Accretable yield during 2012 decreased primarily as a result of the accretion recognized. Accretable yield during 2011 decreased primarily as a result of a change in expected cash flows on the Company’s covered loans during 2011.

Troubled Debt Restructurings

During the course of its lending operations, the Company periodically grants concessions to its customers in an attempt to protect as much of its investment as possible and minimize risk of loss. These concessions may include restructuring the terms of a customer loan to alleviate the burden of the customer’s near-term cash requirements. In order to be considered a troubled debt restructuring (“TDR”), the Company must conclude that the restructuring constitutes a concession and the customer is experiencing financial difficulties. The Company defines a concession to the customer as a modification of existing terms for economic or legal reasons that it would otherwise not consider. The concession is either granted through an agreement with the customer or is imposed by a court or law. Concessions include modifying original loan terms to reduce or defer cash payments required as part of the loan agreement, including but not limited to:

•

a reduction of the stated interest rate for the remaining original life of the debt,

•

extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk characteristics,

•

reduction of the face amount or maturity amount of the debt as stated in the agreement, or

•

reduction of accrued interest receivable on the debt.

In its determination of whether the customer is experiencing financial difficulties, the Company considers numerous indicators, including, but not limited to:

•

whether the customer is currently in default on its existing loan, or is in an economic position where it is probable the customer will be in default on its loan in the foreseeable future without a modification,

•

whether the customer has declared or is in the process of declaring bankruptcy,

•

whether there is substantial doubt about the customer’s ability to continue as a going concern,

•

whether, based on its projections of the customer’s current capabilities, the Company believes the customer’s future cash flows will be insufficient to service the debt, including interest, in accordance with the contractual terms of the existing agreement for the foreseeable future, and

•

whether, without modification, the customer cannot obtain sufficient funds from other sources at an effective interest rate equal to the current market rate for similar debt for a nontroubled debtor.

If the Company concludes that both a concession has been granted and the concession was granted to a customer experiencing financial difficulties, the Company identifies the loan as a TDR. For purposes of the determination of an allowance for loan losses for TDRs, the Company considers a loss probable on the loan, which is reviewed for specific impairment in accordance with the Company’s allowance for loan loss methodology. If it is determined that losses are probable on such TDRs, either because of delinquency or other credit quality indicator, the Company establishes specific reserves for these loans. For additional information on the Company’s allowance for loan losses, see Note 7 to these unaudited consolidated financial statements.

Information about the Company’s TDRs at June 30, 2012 and 2011 is presented in the following tables. The Company excludes as TDRs modifications of loans that are accounted for within a pool under Subtopic 310-30, which include the covered loans above, as well as the loans acquired in the OMNI and Cameron acquisitions completed during 2011. Accordingly, such modifications do not result in the removal of those loans from the pool, even if the modification of those loans would otherwise be considered a TDR. As a result, all covered loans and loans acquired from OMNI and Cameron that would otherwise meet the criteria for classification as a troubled debt restructuring are excluded from the tables below.


	Total TDRs
(Dollars in thousands)	Accruing Loans
	Current		Past Due Greater than 30 Days		Nonaccrual TDRs		Total TDRs
June 30, 2012
Residential
Prime	$	—	$	—	$	—	$	—
Commercial
Real Estate		645		—		19,848		20,493
Business		24		—		1,887		1,911
Consumer and Other
Indirect Automobile		—		—		—		—
Home Equity		—		—		226		226
Credit Card		—		—		—		—
Other		—		—		—		—

Total	$	669	$	—	$	21,961	$	22,630

June 30, 2011
Residential
Prime	$	—	$	—	$	—	$	—
Commercial
Real Estate		55		—		20,443		20,498
Business		—		—		1,745		1,745

Consumer and Other
Indirect Automobile		—		—		—		—
Home Equity		—		—		237		237
Credit Card		—		—		—		—
Other		—		—		—		—

Total	$	55	$	—	$	22,425	$	22,480

Of the $22,630,000 in total TDRs, $3,724,000 occurred during the current six-month period through modification of the original loan terms. Total TDRs of $22,480,000 at June 30, 2011 included $6,459,000 of TDRs that occurred during the six-month period ended June 30, 2011. The following table provides information on how the TDRs were modified during the six months ended June 30, 2012 and 2011.


(Dollars in thousands)	2012		2011

Extended maturities	$	427	$	—
Interest rate adjustment		277		236
Maturity and interest rate adjustment		2,450		—
Extension of interest-rate only payments		540		645
Forbearance		30		5,578
Covenant modifications		—		—
Other concession(s)⁽¹⁾		—		—

Total	$	3,724	$	6,459

(1)	Other concessions include concessions or a combination of concessions that do not consist of maturity extensions, interest rate adjustments, forbearance, and covenant modifications.

Information about the Company’s non-covered TDRs occurring in these periods, as well as non-covered TDRs that subsequently defaulted during the previous twelve months, is presented in the following tables. The Company has defined a default as any loan with a loan payment that is currently past due greater than 30 days, or was past due greater than 30 days at any point during the previous twelve months.


	June 30, 2012						June 30, 2011
(In thousands, except number of loans)	Number of Loans		Pre- modification Outstanding Recorded Investment		Post- modification Outstanding Recorded Investment		Number of Loans		Pre- modification Outstanding Recorded Investment		Post- modification Outstanding Recorded Investment
TDRs occurring during the six-month period
Residential
Prime		—	$	—	$	—		—	$	—	$	—
Commercial
Real Estate		12		4,073		3,724		3		5,551		4,486
Business		1		27		—		2		5,443		1,736
Consumer and Other
Indirect Automobile		—		—		—		—		—		—
Home Equity		—		—		—		1		237		237
Credit Card		—		—		—		—		—		—
Other		1		—		—		—		—		—

Total		14	$	4,100	$	3,724		6	$	11,231	$	6,459


	June 30, 2012				June 30, 2011
Total TDRs that subsequently defaulted in the past 12 months	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
Residential
Prime		—	$	—		—	$	—
Commercial
Real Estate		45		20,233		26		19,798
Business		8		1,887		4		1,745
Consumer and Other
Indirect Automobile		—		—		—		—
Home Equity		1		226		—		—
Credit Card		—		—		—		—
Other		1		—		—		—

Total		55	$	22,346		30	$	21,543